A successful startup business venture is an aggregation of many ingredients, including an innovative business concept; entrepreneurial and management skills, knowledge, and experience; and capital funding. These elements generally are contributed by entrepreneurs, universities, and venture capital firms, respectively. Presently, a degree of disconnect exists between these actors, such that pooling their respective contributions to create and grow a successful startup business venture is a common difficulty.
In some cases there will exist one actor or ingredient but neither of the other two. In other cases, for example, venture capital firms (VCs) and entrepreneurs interact, but there are no incentive structures or instruments that benefit all actors in the VC, entrepreneur, and university micro-economy. An entrepreneur, such as a young entrepreneur or a student entrepreneur, for example, may possess an innovative new business idea, but typically will lack the business and management skills and experience, as well as the capital funding, to pursue and transform the business idea into a successful startup business venture. However, there is currently no successful structure to capture deal flow with student entrepreneurs.
VCs, for their part, must invest in ventures that will yield high returns, and often are too selective to invest in early startup business ventures. VCs with large funds cannot afford to touch smaller deals. Some may argue that early stage investors exist, but VCs do not invest at a concept stage. Technically the earlier deals have even higher yields; the lack of interest has more to do with the higher risk in dealing with younger, first-time university entrepreneurs and the fact that they have to deploy larger amounts of cash at a time due to their fund size. This presents a serious disadvantage given that many new successful companies are being formed by a young generation of CEOs during or straight out of college. VCs lack early visibility into such startup business ventures and the ability to investigate and evaluate their potential for return. VCs therefore need stronger relationships with universities in order to gain access to this increasingly promising body of student entrepreneurs.
Universities, despite their contributing the ingredients of business and management knowledge to a startup business venture to student entrepreneurs, fail to realize any part of the returns of a startup business venture founded by its students. Currently, there may be some return on investment, realized by deploying capital to a VC asset class and waiting for a return to materialize in a VC's portfolio.
Specifically, university endowments grant scholarships that enable students to obtain an education at reduced or no cost. FIG. 1 depicts a conceptual diagram 100 of a prior art endowment grant process. The diagram 100 includes a university endowment 102, an asset class 104, and current expenses 106. In the example of FIG. 1, the university endowment 102 invests (110) in the asset class 104. Typically, this involves giving money a VC asset and/or other assets. In the example of FIG. 1, the asset class 104 earns a return (112), which is given back to the university endowment 102.
In the example of FIG. 1, after the university endowment 102 receives the return, the university endowment can pay (114) current expenses 106. However, at this point, there is no return (116) on the payment of current expenses 106.
A university endowment may have scholarships that constitute an expense or suck cost that bears no return to the university, except should an alum make a donation to the university endowment at some indeterminable future point in time. Even in such a case, to trace the donation directly back to the scholarship would be highly speculative, and thus future return on a scholarship is difficult if not impossible to measure. In terms, then, of realizing returns on a startup business venture to which a university has directly contributed, the university is cut out of the loop. Of course, the university may indirectly get a return by investing in VC assets. However, since no one really invests in university entrepreneurs, this can be construed to mean that the university is, for all practical purposes, cut out of the loop entirely.
A return on the payment of current expenses would be similar to earning a return for paying bills, or a bill collector marking down that you have paid and invests in the stock market for you. Since this seems like a natural state of affairs, no effort has been made to change the status quo. The foregoing examples of the related art and limitations related therewith are intended to be illustrative and not exclusive. Other limitations of the related art will become apparent upon a reading of the specification and a study of the drawings.
The foregoing examples of the related art and limitations related therewith are intended to be illustrative and not exclusive. Other limitations of the related art will become apparent upon a reading of the specification and a study of the drawings.